# Oil rises on prospect of OPEC supply cut, demand growth
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-08-29
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Oil Prices Rise 1% on OPEC Cut Expectations Amid Conflict
Meta Description: Expectations of OPEC output cut, Iran deal revival, Libya conflict, and demand boost drive oil prices up 1%.
URL: https://financedigest.com/oil-rises-on-prospect-of-opec-supply-cut-demand-growthhtml

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By Sonali Paul and Mohi Narayan

(Reuters) -Oil prices rose 1% on Monday, as expectations that OPEC would cut output if needed to support prices, coupled with conflict in Libya and rising demand amid soaring natural gas prices in Europe, helped offset a dire outlook for U.S. growth.

U.S. West Texas Intermediate (WTI) crude futures were up 45 cents, or 0.48%, to $93.51 a barrel by 0632 GMT, adding to a gain of 2.5% last week.

Brent crude futures rose 16 cents, or 0.16%, to $101.15 a barrel, [extending last week’s gain](https://www.financedigest.com/ftse-100-extends-gains-micro-focus-soars-on-buyout-deal.html "FTSE 100 extends gains, Micro Focus soars on buyout deal") of 4.4%.

Oil [prices are inching higher on hopes of a production cut](https://www.financedigest.com/tesla-expands-discounts-with-price-cuts-in-europe-singapore-israel.html "Tesla expands discounts with price cuts in Europe, Singapore, Israel") from OPEC and its allies to restore market balance in response to the revival of Iran’s nuclear deal,” said Sugandha Sachdeva, vice president of commodity research at Religare Broking.

Strong U.S. oil [exports](https://www.financedigest.com/u-s-oil-exports-to-europe-hit-record-in-march-on-steep-discounts.html "U.S. oil exports to Europe hit record in March on steep discounts") and a bigger-than-expected draw of oil inventory in the last couple of weeks have also eased some demand concerns amid slowdown fears, Sachdeva added.

Both benchmark contracts had traded lower earlier in the day as the dollar climbed after Friday’s blunt comments from Federal Reserve Chairman Jerome Powell that the United States faced a prolonged period of [slow growth](https://www.financedigest.com/uk-recruiters-slow-pace-of-pay-growth-in-march-rec-survey-shows.html "UK recruiters slow pace of pay growth in March, REC survey shows") amid further rate hikes.

While a strong dollar restrains broad commodity prices, the undersupply issue in the oil markets will probably [continue to support](https://www.financedigest.com/adnami-appoints-burnett-and-bukholt-to-support-continued-expansion.html "Adnami appoints Burnett and Bukholt to support continued expansion") the upside bias,” CMC Markets analyst Tina Teng said.

[Oil prices](https://www.financedigest.com/oil-prices-rebound-after-opec-upgrades-china-demand-outlook.html "Oil prices rebound after OPEC upgrades China demand outlook") have been buoyed by hints from Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, that they could cut output in order to balance the market.

The United Arab Emirates is aligned with Saudi thinking on output policy, a source told Reuters on Friday, while the Omani [oil ministry also said it supported OPEC+](https://www.financedigest.com/oil-prices-rise-after-opec-keeps-output-steady-russian-price-cap-imposed.html "Oil prices rise after OPEC+ keeps output steady, Russian price cap imposed") efforts to maintain market stability.

Sources said last week OPEC would consider cutting output to offset any increase from Iran, should [oil sanctions](https://www.financedigest.com/oil-spills-and-near-misses-more-ghost-tankers-ship-sanctioned-fuel.html "Oil spills and near misses: more ghost tankers ship sanctioned fuel") be lifted if Tehran agrees to revive a nuclear deal.

Heavy clashes in Libya’s capital that killed 32 on the weekend [sparked concern](https://www.financedigest.com/shares-slip-yields-rise-as-u-s-data-sparks-rate-hike-concerns.html "Shares slip, yields rise as U.S. data sparks rate hike concerns") that the country could slide into a full-blown conflict, leading to a disruption in supply of crude from the OPEC nation.

Besides, soaring gas [prices are likely to result](https://www.financedigest.com/immediate-lift-of-oxford-property-prices-to-result-from-new-direct-high-speed-rail-connection-with-london.html "“Immediate lift” of Oxford property prices to result from new direct high speed rail connection with London") in gas-to-oil switching, which remains a positive trigger for prices,” Sachdeva said.

(Reporting by Mohi Narayan in New Delhi and Sonali Paul in Melbourne; Editing by Himani Sarkar)


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